General Motors (GM) reinstated its dividend last week, a move that was widely anticipated but nonetheless very welcome for long-suffering GM stock holders. General Motors — which suspended its dividend in 2008 before eventually going through a bankruptcy reorganization — will pay 30 cents per share to shareholders of record as of March 28. At today’s price, that works out to an annual dividend yield of about 3%, which makes GM stock a relatively high-yielding large cap by today’s standards.
The GM dividend is the final plank in the company’s efforts to become a “normal” company again. GM was snidely called “Government Motors” after years of controversial government bailouts and direct ownership, but as I wrote late last year, the government sold off its remaining GM stock, and General Motors is officially free of government ownership. I’m bullish on GM stock, and I expect it — along with most of the auto sector — to outperform the market in 2014. Should you buy GM? Absolutely. But buy it with the portion of your portfolio set aside for speculative growth plays, and don’t plan your retirement around GM’s quarterly dividend check.